Rose 'no thanks' to Sainsbury bidders

The Qatari-backed investment fund plotting an audacious £10.4bn bid for Sainsbury's tried to persuade Marks & Spencer to open a clothing concession in the supermarket's stores.

The controversial move came only days before the fund disclosed its takeover intentions.

A secret meeting between Paul Taylor, fronting the bid talks for the Qatari Delta Two investment fund, and M&S boss Stuart Rose was brokered by David Mellor, the fund's long-time adviser and a former Conservative minister.

M&S is thought to have seen no strategic benefit in Taylor's offer and immediately called off further talks. It is thought Taylor is eager to mimic Asda's success with the George range and Tesco's Florence and Fred clothing brand.

Sainsbury's, which has 788 stores with annual sales of more than £18.5bn and profits of £324m, has the successful Tu clothing range.

But sales have been hampered by a lack of store space and it is unclear how an additional fashion range would fit in. Taylor is also thought to have set up meetings with other retailers proposing a similar deal.

Rose would not comment, but industry sources said Taylor's approach appeared naive. They also suggested that he looked less than surefooted with the revelation that he had appointed Tony Campbell, the former deputy chief executive of Asda, as the potential chairman for the supermarket chain if his bid succeeded.

Campbell, 57, is a high-profile retailing veteran who spent two decades at Asda and left in 2001 when he was deputy chief executive.

He is a former director of Punch Taverns and holds a non-executive position at First Choice holidays. But industry insiders, who have dubbed him Teflon Tony, say he would be unlikely to take a 'hands on' approach with Sainsbury's.

Marks & Spencer is Britain's largest department store chain by sales with more than 450 stores in the UK and 150 abroad.

The company gave its first-quarter trading update this month and announced that like-forlike sales, the key indicator of how well a retailer is doing, was up two per cent, just under twice analysts' predictions, prompting a 20p bounce in shares.